While you’re unlikely to meet that special someone through your 401(k) plan, an employer match is still unbelievably valuable and so, dare I say, “totally worth it.”  A matching contribution is free money.

You: Okay. But nothing is free.  I learned that the hard way from Gary.

True, but some things are true no-brainers. A 401(k) plan with an employer match is one such thing.

You: So how does it work? 

An employer match is quite simple.  But I’ll make it simpler still.  Let’s say you work for a company that offers a 401(k) match.

You: I do.

In that case, there are only two possibilities for you and here’s how they each work:

  • You put money in your 401(k) plan and, therefore, your employer does also.
  • You don’t put money in your 401(k) plan and, therefore, your employer does n’t either.

The implication is clear.  By failing to contribute to your 401(k) plan, you voluntarily turn down money.  Free money.  It’s just there for you to take it, but you’re saying, “No thanks.”  You would never do so knowingly, right?

You:  Of course not.

Well, now you know.

You:  True enough.  I’ll enroll in my 401(k) plan at least to the level my employer matches so I don’t turn down free money.

Beautiful. Now that’s living Beyond Paycheck to Paycheck.

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